Readers' comments

The problem with this whole financial mess is, who has profited from this overspending. If we could find out, then these people should have to pay back their fair share of this financial burden.
Yes it is easy to say I did not create this problem. Yes it is easy to blame the corrupt governments and their policies.
Until then we should all bear this financial burden, or go bankrupt.
We can ensure that this does not happen again, by installing the proper legislation/Acts.
Only a Technocracy government would be efficient, decisive and responsable enough to enact the right legislation.

Technocracy is an art to manage the states affairs with utilizing the efficient skills in every aspect. Historically, it is proved that technocrat’s safe the crumble states when their political leaders have lost the confidence of public due to corruption and favoritism to self-interest.

In such circumstances, technocrats could play vital role to resolve the crisis by their best relevant qualifications and training skills.

ECB president Mario Dragi, the former governor of Bank of Italy, being technocrats, has been rejected to defend the Italian bonds to spread around 400-450 basis points because he knows the long-term consequences.

He, therefore, suggested implementing the reforms in monetary and fiscal sectors. As high yield bonds will further shattered the market credibility, the market forces and high interest to buyer will enforce the government to make reforms.

Otherwise, high-yields bonds will detach the investors from the bonds markets due to unstable situation in the economy. Acquiring the revenues by borrowings from ECB/IMF will shift the burden on monetary sectors to increase the interest rate to more inflation by increasing the supply of money.

On high interest rate, investors discourage to get loan for industries as growth is already aggravating, economy will confront more recession.

Decision to acquire revenues to fiscal sectors through levy taxes on high income class and sale-out the government assets will approach to stability in economy under the guided planning of technocrats that how to implement this without injuries of working class?

Technocracy is the way to protect the euro-zone from disintegration, as political leaders learn not enough to secure the interest of states and economy.

First time I heard the words "technocracy" and "technocrats" was in high school, in Spanish History class. They were the Opus Dei ministers appointed by Franco in the 60s. It's a pretty elegant euphemism to say "not democratically elected". For instance, the chinese Government is full of "technocrats", isn't it?

Someone should get the message to Europe that they need to do what we did when we wrote our Constitution. A little history can do a lot of good. They can learn from us and we can help them and we will help them. Put your comments where they will read you and send e-mails to your friends in Europe. The euro can make Europe united like we are, and that will be good for both of us.

No amount of political pressure can do what the markets can do. Germany and France violated the stability pact and got away with it. A grand bargain of stricter rules against bailout or Eurobonds is of the table, because nobody can enforce stricter rules.
If the ECB governing body will vote Germany down to start the printing press, and the Euro will start to go down which it miraculously hasn't to date, Germany will simply walk out of the Euro. Might economically not in the best interest of Germany, but the mood is so that reintroducing the D-Mark would have the Germans partying in the streets.

I think that we need to look again a the role of Goldman Sachs in this whole affair. First they help Greece and Italy enter the eurozone by hiding the real state of their finances by creating complex financial instruments for them and then when the proverbial hits the fan they have associates of the company parachuted in as some of the technocrats to get out the mess that they helped create.

There is a common belief (among some in society) that technocrats will rule better than politicians, making wiser decisions for society. I don't believe it myself. Rulers being unaccountable to anyone never has and never will lead to good government. I look at Bernanke and Geithner in the US, forcing down the throats of the people what they learned in their textbooks at university while 4 -5 million people are forced out of the work force every year

I don't understand - the ECB is not a lender of last resort, so it could not lend unlimited money to Italy. It could do something to that effect through the secondary market, but wouldn't that be exactly what you are criticizing - the Bank taking the matter into its own hands, i.e. technocratic rule? If the ECB oversteps its authority and lends money to Italy the whole situation would be more democratic? That's nonsense.

And suppose for a moment that the Monti Government manages to stabilise things enough for the immediate fear of Italian default to recede and buy time for working out a longer term solution- but at the cost of monumental unpopularity. It rapidly becomes clear that the 2013 elections will result in a landslide in both houses for parties promising to reverse the Monti package the moment they can. The markets start to go haywire again. The ECB lets Italian bond yields soar in the hope of scaring the voters into "seeing sense". The polls move even more firmly the other way.

Then what? A state of emergency, with the elections "postponed" (in effect an Italian version of what happened in Algeria some years ago when it looked as if the Islamists would win an election)? The creation of masses of tame life senators to outvote the elected ones and create institutional paralysis, allowing the Monti government to remain on a caretaker basis? Or does the ECB sit back and allow Italy to go broke?

It is not that easy. As someone pointed out, if Mr Monti had been a candidate for the centre-right in the past ten years (as opposed to Mr Berlusconi), he would have easily won the election, since the right-wing voters supporting Berlusconi would have voted him anyhow, and the centrists in the left-wing camp would have voted him without moral doubts. The left has also failed to produce any centrist leader. Therefore there is a firm possibility that a majority of Italians would support, in a vote, Mr Monti and his program, and that they had simply been denied a similar choice in an election by the political system. If so, and if Germany has not totally lost its mind to impose recession through excess austerity, your scenario is wrong. In small incremental amounts, people will digest a lot of economic pain - if they see it as necessary. Greeks seem a spoiled bunch now, but I am sure that if austerity was to preserve Hellas from the Turks, they would double any effort their government asks them to do.

I think there is the rule of law, the Maastricht treaty, 1992.
No bail out, and debt/ GDP target at 60 %. Very good rules. Those who now suddenly, 20 years later, don't like the rules, get out. Very simple.

Ultimately, the critical decisions must be made by elected leaders in member nations.

So Ryan is sticking to The Paternalist’s strict editorial line that government-by-politician (“elected leaders”) must be maintained at all costs and that the subject peoples of Europe must on no account be given any meaningful say over what is done to them.

The most important lesson from the Euro debacle is a lesson that the The Paternalist can never admit:

This was a disaster inflicted on the peoples of Europe by self-serving megalomaniac politicians (“elected leaders”) operating outside the constraints of Democracy.

From the very outset the Euro zone – with its multiplicity of languages, low labour mobility, and disparate economies - was recognised as being an inappropriate currency union. Even as it was being introduced, it was a disaster foretold.

The cockamamie Euro scheme was never intended to benefit the peoples of Europe. It was forced upon the peoples of Europe for political reasons by megalomaniac politicians (“elected leaders”) drunk with the thought that a currency union would be the vehicle with which they would write themselves into the history books as “Great Leaders” and “The Founding Fathers of a United Europe”.

The German People in particular, upon whom the whole scheme hinged, were denied any direct say in whether they were to participate.

Where the People did have a direct say – notably in Sweden and Denmark – they voted to avoid the mess, even though The Great and the Good from both sides of politics (“elected leaders”) were urging them on into folly! In Britain the politicians didn’t even dare to call the referendum.

At no point in the history of the EU member states have the People ever been given the opportunity to freely choose the form of government they prefer for their country. At no point have they ever consented to having their lives ruined by odious self-serving megalomaniac politicians (“elected leaders”) who enjoy a monopoly on legislative power, supported and defended by paternalistic apologists like this newspaper.

If the People had had their say earlier (as in Sweden, as in Denmark), they might have been able to prevent this disaster.

What is so bizarre about this paternalism is how it is utterly at odds with the principles of classical liberalism which the newspaper professes to support. (See the discussion here posted by commenter Steven Spadijer.)

The Economist wasn’t always like this. There was a time when it was known as a defender of Democracy. Brian Beedham’s articles are widely quoted to this day.

In recent years, however, the once respected newspaper has been infiltrated by paternalistic ideologues who, with each passing week, become ever more desperate as their world collapses around their ears and they try to explain away the manifest failure of their incoherent ideology.

If you had read your history you would know technocracy has always been the outcome of the tragic crises caused by economic activism (heterodox economics, Keynesianism, dirigisme, or plain old debt-fueled populism). The technocrats, one could say, are the recurring doctors to cure leftist patients who made themselves sick or obese.

If you want a more sophisticated explanation there are two chapters in my book dealing with the aetiology of the crisis-induced sequence of populism and activism through economic history.

Here is my quick response to this evening’s column by Germany’s foreign minister Guido Westerwelle at the Financial Times:

________

Guido Westerwelle:

There are many people who do not believe the eurozone is indispensable but who nevertheless fully agree with you that *if* the eurozone is to continue to exist it should be on the expansive terms that you have outlined here.

The only meaningful intellectual choice over the means to *end* the crisis is between a Schumpeterian or Hayekian liquidation (with probable euro break-up and defaults) or, on the other hand, what might be loosely termed a Weberian (and indeed Kantian internationalist!) preference to strengthen and expand central governance mechanisms, and bourgeois values, rule and enforcement of law.

Either way I do hope that a German/Austrian intellectual preference for restructuring with adequate legal parameters of creative destruction will prevail over today’s dominant English-language ideology of undisciplined Keynesian discretionary activism and Keynesianism's romantic desire to wish the crisis away like magic with funny money and debt forgiveness and other moral hazards.

The best of luck to you in this struggle.
________

R.A.

The Economist is fast becoming irrelevant to any intelligent understanding of today’s problems in Europe. This week’s leader editorial on The German Problem is the latest example of wrongheadedness. It is the Keynesians and their generation of students who are rigid now.

“I'd prefer the ECB to act promptly and boldly, without conditionality, damn the political moral hazard.”

In the long run we’re all dead after all! This is typical sentiment from mainstream economists. Everything be damned but NGDP growth! But pragmatism (short term thinking) like this is what got Europe into the current mess.

Europe ignored the member states that flouted the rules regarding debt and deficits for over a decade. Now mainstream economists want the ECB to ignore its bylaws and flout the law even more. What’s the point of passing laws if no one intends to abide by them?

You can ignore the long run consequences of you actions for a while, but the long run has a nasty habit of showing up at the most inconvenient times. And when it does, it is ugly as sin.

I'd like to make a comment that might seem hyperbolic. I apologize in advance.

On one hand, I am happy that there are now economically-literate governments in both Greece and Italy. Berlusconi was long viewed as a clownish figure, and Papandreou turned himself into one during the past month. Technocrats may offer the best hope of keeping the good ship Europe from imploding.

On the other hand, I am very negative about unelected governments. It would be bad for the new Greek and Italian governments to go "too far", and fall to political pressure. Things may well be worse (in the long term) if the unelected governments succeeded. I would be wrong to equate Mario Monti with Il Duce, but I am very nervous about any steps that could legitimize future strongmen.

At this point, it seems that there is no elegant solution to the Euro crisis. Any fix is going to be "messy" - we just don't know yet what kind of mess that will be. I would feel more comfortable if the decisions were supported by voters (despite the dangers of populism).

Technocrats who have done their career in Italy have learnt that it's their task to get the right thing done, and that elected politicians can't be trusted with anything (the fact that the outcome of this line of reasoning is pretty undemocratic is not a major concern). Not sure whether Draghi is of this breed, but he may be.

There are however two limitations, or comments, to the reasoning if the post. To the opprobrium of The Economist if I am right, the first is that democratic legitamacy in the EU can only be remedied by shifting more powers to the Parliament and the Commission: intergovernmental solutions are not working, and will not work. Whether this leads to a United States of Europe or not is a moot question, possibly we'll never become that integrated - but you can't have the destiny of the United States, of Canada, or of any large state depend on the troubles of Rhode Island or Newfoundland - and you can't have California, or New York State, or Ontario dictate the conditions to all other states. Hamilton saw that in his day (for the little as I know of his influence); the Civil War showed how right he was in seeing that a Union needs to be tight, or not be. Considering what a divided Europe has always done, and taking into account the size of powers in this era, I can't really see a choice (and I hope that rationality will eventually trump romantic isolationism also at The Economist).

Second, democratic will is mediated by political classes, or elites. Therefore, I would be cautious in making firm conclusions about the masses based on current politicians'statements. That said, as bond yields grow for all countries bar Germany, Merkel's position is starting to look increasingly difficult: can you really faul the Austrians, the Finns, the Dutch? They have not sinned.

Technocrats who have done their career in Italy have learnt that it's their task to get the right thing done, and that elected politicians can't be trusted with anything...

I wonder to what extent that fecklessness of Italian politicians, and the voting of the Italians who elect them, is a result of their beklief that the technocrats will take care of the real problems. So they are free to indulge themselves by not worrying about figuring out and implementing solutions in the real world.